Silver’s spell of manic-depression

Silver has had a “manic-depressive” year, says Tatyana Shumsky in Barron’s. Having hit record levels of near $50 an ounce last June, it fell almost 30% in five days. This year it has traded in a range around the $30 mark.

Silver has a “nasty” reputation among investors, given its extreme volatility, says Sterling Smith of Country Hedging. The market is very small and thus prone to big jumps when sentiment turns. To complicate matters further, silver is both an industrial metal and a traditional form of money and store of value, like gold.

While the lacklustre global backdrop implies subdued demand for industrial metals, silver also tends to ape and magnify gold’s moves.

Gold’s prospects remain bright. With “Europe in a seemingly never-ending crisis, China in a slowdown and the US unable to grow consistently”, as Danny Esposito of Penny Stock Detectives puts it, yet more money printing seems likely, which bodes well for the monetary metals.

So those with an appetite for risk may want to tuck away some silver, as history suggests it should outrun gold during the yellow metal’s next upswing. Investors can track the silver price with the London-listed Physical Silver ETF (PHSP).